> “If cryptocurrency exchanges want to be the banks of the future, we need to make sure people can have confidence in these systems,” she [Deputy Attorney General] said during an interview at the Aspen Cyber Summit.
You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.
Ironically, the harder the US and other countries push exchanges - to tax, to fight the endless wars on drugs and terrorism - the more likely it is that users will implement the behaviors that will obviate the need for exchanges in the first place.
"You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future."
That's not fair. Crypto Exchanges being regulated does not affect how Bitcoin works. I cannot do bank transactions without using the bank. But you'll still be able to do Bitcoin transactions without exchanges, even if they get banned.
> But you'll still be able to do Bitcoin transactions without exchanges, even if they get banned.
Exactly. But a ban seems highly unlikely. Instead, exchanges are more likely to be regulated and subverted to the point of being useless. You're right, Bitcoin would continue on its merry way because exchanges are peripheral to using Bitcoin past a point.
If that transition never happens, Bitcoin will have failed.
you can physically mail someone cash if you want to, the question isn't if you can, the question is if it makes sense for the vast majority of users, which is really the yardstick things should be measured against.
> You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.
the 'entire idea' is a monetary system that isn't controlled by a central party, doesn't have an inflationary supply and thus can't be rigged for cantillon insiders; banks existed before both of these things and the basic function of lending money and returning interest on savings is not objected to by this worldview
There's no reason you can't operate a fractional reserve lending operation with bitcoin. You also don't need a central bank or other authority either. It's as simple as taking a deposit and loaning out some of it. And hoping you get payments or more deposits before people want their deposits back.
There's even value in not taking deposits, but just loaning out founder/investor's capital. Although maybe that's just a weird deposit.
I'm not sure how to make deposits useful without lending out some of them, though. I guess just money is less likely to be stolen in a bank than under your pillow, but probably not in a cryptobank.
The value is in that the bank has more capital than you.
Consider the case of islamic banking, for example. You could think that lending money without charging interest is completely bonkers and it’s impossible to make a business that way. However, by thinking out-the-box you can get an arrangement which is favorable to all involved parties.
The quote is so indicative of how locked into the dominant paradigm these people are. Smart contracts are the banks of the future. Programmable money will tax, loan, finance, and govern. It will supplant much of the state apparatik with math that obliviates the need for external coercive force for many applications. As smart money matures and proves it’s superiority to the average member of society, it will leave these dinosaurs blinking in confusion.
There's so much scamming around cryptocurrencies. I personally lost several thousand dollars from the Nano/BitGrail scam.
A dear friend of mine delved into cryptocurrencies specifically to buy drugs, and he gets them shipped through the US postal service all the time. He regularly abuses ketamine and LSD in large doses and has done serious harm to his health with them.
It's deeply depressing to me what has happened to this dream of internet currencies, and I hope that the US justice department can clean this garbage up.
I realize this is a website primarily about startups rather than literal hackers, but the sentiment in your post that the government should protect us from risky investments and putting things in our bodies has to be about as far from the hacker ethos as I think I’ve seen. Getting scammed is infuriating and its sad to see drug addiction affect friends but as someone who has worked closely with some of these agencies giving them control over more of American life is not the answer to anything.
Just for the record I've been utilizing LSD and other psychedelics with no ill effects and many positive effects for the past 30 years with no involvement of cryptocurrencies whatsoever.
As far as the rest of it, obviously the blockchain fails quickly for day-to-day currency uses, and that's blatantly obvious. So it's a store of wealth, maybe a tax dodge, but hardly all that 'revolutionary'.
You getting scammed is on you. I'm sorry it happened to you and it's happened to me too but you knew the risks when you entered and if you didn't you ought to have informed yourself. Looking up with your arms open crying, "Save us!" From who? Yourself and your mistakes? I don't need the SEC shutting Telegram's decentralized initiative down because they're "worried about the investor". That's an excuse for strong-arming and it's deplorable.
Most of the SEC's actions around cryptocurrency have been in this fashion not in protecting the investors from real scam projects. Coinbase, Telegram, Ripple: none of these companies fits the definition of a scam yet the SEC had a field day going after them in public, at least in two of these three cases after these companies had been privately assured by the SEC they were good to launch.
This argument was potentially accurate as late as 2015, but given the fact that Bitcoin is so much easier to purchase and is considered an investment, I think you’re seeing the lawful and legitimate use of Bitcoin much more than for illegal purposes.
If your next argument is, “Not every Bitcoin transaction is for illegal purposes but every illegal transaction uses Bitcoin”, the same could be said of cash.
How could you possibly have enough information to claim that "almost all" crypto transactions are illegal? As someone who works in crypto, I find this claim highly dubious.
I see this as a positive development, as a step towards wide Bitcoin acceptance. I think what we are witnessing is that Wall Street, both Buy and Sell side, is turning towards cryptocurrencies. They are not afraid of regulation and will work within regulatory framework. It will put a dumper on some of the early ideas behind Bitcoin and the tradeoff will be a wide adoption. Will these regulation advantage large financial institutions agains startups? I think yes, it will. The cryptocurrency startups will have to learn to work in a more regulated environment. As a tradeoff, I think this market will continue to explode. Can US Gov ban cryptocurrency? Theoretically, yes, but in practice, US Government is not a monolith and it is responding to the various interest groups. With $2T worth of cryptocurrency on the market, there is a lot of vested interest to keep this going.
> “If cryptocurrency exchanges want to be the banks of the future, we need to make sure people can have confidence in these systems,”
That's all you really need to know about the intent. They see an area where they have little influence, and as "the government" see the need to inject themselves where they aren't wanted. Vipers and leeches, them.
This. And then in a few years, "we've always done it this way." And then the agents of the bureau of expansion will have to meet their metrics, and will unionize, ensuring they get their bonuses and perks.
It’s the same as their influence on the internet; limited and not really effective unless you’re interested in doing everything by the book. China puts a lot of effort into maintaining the Great Firewall, but because of the decentralized nature of the internet, there will always be a way through the restrictions.
I suspect the same will be true of crypto – if you want to be entirely above-board and legit (and want to acquire fiat money), you’ll need to go through a centralized layer with KYC and regulation and consumer protection.
But, like the internet, the decentralized nature of cryptocurrencies means you’ll always have the option to circumvent these controls. If you want to acquire fiat, any such circumvention may be legally precarious, but if you don’t depend on the centralized layer then there’s nothing anyone can do to stop you from transacting with a consenting counterparty.
Basically: let them regulate the space. It will be good for consumer confidence, since 99% of people willingly accept regulation in exchange for protection from FDIC, CFPB, etc.
The centralized layer will benefit those people by mitigating the risk of total wallet compromise (your bank can reverse erroneous charges, and many say that any crypto “bank” needs the same ability to compete). If you want to opt-out of that, you can do so, but at your own risk (financial and potentially legal).
> It will be good for consumer confidence, since 99% of people willingly accept regulation in exchange for protection from FDIC, CFPB, etc.
I think there will be other ways to build "consumer confidence" without relying upon promises from easily corruptible centralized entities who have routinely engaged in moral hazards at scale for the benefit for a few actors above and beyond other actors.
If those centralized entities declare those who try to mitigate against the financial risks in a decentralized fashion for those who do not willingly enter into such risks as illegal, "opt-out" is legally untenable and I will expect increasingly more conflict going forward.
I talked with a guy yesterday about how to build out the on chain swaps market and the current challenges with doing so, who worked for some of these deeply regulated mega banks trading interest rate derivatives for 13 years, and something tells me that these folks (you know, the grunts on the ground who are intimately familiar with how modern money really works and how it can fail on a day to day basis) are going to run circles around around career regulator <-> industry revolving door (and ultimately self serving like anyone else) bureaucrats in dealing with this conflict…
Still though where is the balance between anarchy and big brother? Businesses manipulate people and dodge taxes with crypto. Maybe now it will be harder.
Their remit is likely going to be much broader than robbery, and will likely become a kind of paralell internet ATF. I have every confidence they will replicate many of the successes ATF is known for.
This is great progress, sometime in the 1930's some enterprisers convinced Congress to make an insurance fund for private bank users coupled with a variety of enforcement provisions to add confidence to the fiat depository system. Just a matter of time before we get crypto dumped on the public insurance fund too, all we have to do is want it and boom, another boomer argument obliterated!
Its always been a game of confidence. Some people see it and are inspired to put those building blocks in place, others just assume a system is fundamentally flawed and act shocked that it continues to grow and gain confidence.
I think it's important to note that dollars weren't directly convertible to gold for regular citizens for many years before 1971 which is the date that the window was closed entirely.
I wonder if Bitcoin could ever be legal tender in USA. Why would the US government allow the use of a currency it cannot control? I certainly do not understand who would any country make Bitcoin legal tender at first place, unless that country has no stable currency to begin with, and even so, why wouldn't they peg their currency on the Dollar or the Euro instead?
From a financial perspective, I see no advantage in adopting Bitcoin.
Currencies exist to fill a need. Legal tender fills the need to be able to pay taxation obligations. Other currencies can exist for other needs, see scrip for an example of this.
You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.
Ironically, the harder the US and other countries push exchanges - to tax, to fight the endless wars on drugs and terrorism - the more likely it is that users will implement the behaviors that will obviate the need for exchanges in the first place.